London Press Club Interviews Frontera Managing Editor on Frontier Markets

Turning the tables on our Managing Editor, the London Press Club’s David Selves interviewed Gavin Serkin on his book Frontier: Exploring the Top Ten Emerging Markets of Tomorrow (Bloomberg/ Wiley) before an audience of journalists at London’s Frontline Club.

The Top Three: London Press Club Q&A

No. 3 Argentina

Argentina’s new center-right President is busy reversing just about every policy of his Peronist predecessor – except for on the issue of the Falkland Islands, where he’s hinted at territorial ambitions. Is this going to flare up again?

You’re right, Mauricio Macri is unwinding every policy, from huge subsidies on energy, to doing deals with those bondholders that his predecessor, Cristina Fernández de Kirchner, was fond of calling the vultures. Macri is paying them billions of dollars in compensation so that Argentina can now again borrowing from the world capital markets. He is the diametric opposite in everything – except for the Falklands, where he is banging the drum a bit, and saying there needs to be some kind of solution.

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But Macri is a pragmatist. He’s not somebody that will go in like the old generals in the ’80s and storm into the Falklands. He does want to open up a conversation, and I think this is deep-seated in the Argentine psyche. They do see the Malvinas Islands as theirs. It’s probably going to be a diplomatic spat that flares up from time to time, but I don’t see it being military.

For the moment, everyone loves Argentina in the investment world. They sold bonds and they got $70 billion of orders. That’s the most ever for any emerging market. It’s never been seen before.

Argentina has been cut off financially by the rest of the world for so long, there’s no doubt in my mind that it will now be one of the very strong recovery stories of the next few years.

No. 2 Vietnam

Vietnam has been resisting Chinese encroachment in the South China Sea. How worrying do you find that, in terms of the repercussions locally and internationally?

It’s a very uneven relationship because China is the overwhelming buyer of Vietnam’s exports, but from China’s perspective, it doesn’t need Vietnam economically. So in terms of the Spratly Islands and the South China Sea situation, Vietnam now and then will throw stones at China, but it’s all just posturing. China is the major player in that whole region.

The positive point from all of this, however, is that it’s pushing Vietnam – and the Philippines as well because they’re in a similar situation – to cooperate between themselves. So, the ASEAN nations of the Philippines, Vietnam and others in the region are likely to collectively become a bigger, stronger force, where they’re building trade and transport links. Ultimately, the ASEAN nations will rise up to a point where they can challenge China as a group and bring in support from the US.

No. 1 NIGERIA

Nigeria is never far away from stories of corruption and violence in the world’s media. What’s the reality when you’re on the ground?

Violence and corruption isn’t some remote idea. The first meeting we had during my research trip, we needed a car. I found a cab and negotiated a fare. We were getting in when this woman comes along and says, “You can’t go with him. He’s not the official cab company.” So I said, “Well, we are. We need to go to our meeting. Thank you very much.” And then she punches the cab driver. He’s about to get out and have a fight. I told him we needed to get to our meeting, and to drive on or else we’d leave. When he drove off, he said: “It’s lucky I didn’t hit her because did you see? She was pregnant.’ This woman represented a local mafia that operates the taxi zones.

Another cabbie a couple days later was driving along and there was a set of traffic lights up ahead. We turned before the lights. But this policeman flagged down our car. The cabbie just carried on driving, and so the policeman jumps into the backseat and starts whacking him. “You’re a very bad driver,” he says. “You must stop.” But our driver isn’t hearing any of it. “What have I done wrong?” And the cop says, “You didn’t stop at the red light.” Well, I was in the car. The red light was in the distance. He didn’t need to stop. So, the policeman is punching him while he’s driving and he’s elbowing the cop to get him out of the way.

Ultimately, the cabbie kept to his story that he’d done nothing wrong and he said, “If you want to book me, take me along to the police station.” That’s the last thing the policeman wants because then he would have to account to his superiors why he pulled this cabbie over. So, at that point, the policeman jumps out of the car. Our driver is left with blood all over his face.

That’s reality in Nigeria. It’s a very harsh environment that people are dealing with. There is a lot of violence and corruption. But I also met people with an incredible vision of how to lift their community. In the middle of Lagos, there’s the Makoko slum. There’s a lot of pollution in this watery lagoon area. One of the residents that I met had a very poor family. He was supporting his mother and his brothers. And yet I saw him working on this broken, battered laptop. He was studying for a degree in zoology and specialising in pollution control so that he could do something about the disease all around him. His mother was a nurse, treating the sick. But he told me that isn’t enough. “I need to find the solutions for the future.”